4 Comments:

Ahh, Jim Rogers, always good for a nice headline (see: above). In an interview with the Economic Times of India, the famously dramatic and bearish investor, hits on all his favorite themes, like the collapse of the West, the appeal of commodities and farmland, and of course inflation and the collapse of the dollar.

While he's negative on US assets -- he says he's gotten rid of all of his dollars, for the most part -- he advises against shorting this market.

It's a bear market rally. I was going to say I don't think S&P 500 will see new highs. But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,000,000.

Which is one reason why I am not shorting stocks right now. Because there is a possibility of this sort of a thing. There is a possibility that stocks could go through unheard of levels, but would be in worthless currency.

And here's his advice to would-be money managers:

Become a farmer. The world has tens of thousands of hotshot fund managers right now. If I am correct, the financial community is not going to be a great place to be in for the next 30 years. We have many periods in history when financial people were in charge, we had many periods when people who produced real goods were in charge — miners, farmers, etc.

The world, in my view, is changing and is shifting away from the financial types to producers of real goods, and this is going to last for several decades as it always has. This may sound strange but it always happens this way. Ten years from now, it may be farmers who will drive the Lamborghinis and the stock brokers will drive tractors or taxis at best.

Sounding very much like Marc Faber, also an advocate of farming, who recently said he's 100%(!) sure that the US will experience Zimbabwe-like hyperinflation.

Jim Rogers greatest strength is identifying long-wave business cycles, and other long-term trends (I find it interesting, he's bullish on China, but won't live there, because it's too polluted).

The next long-wave bust period (similar to the 1870s, 1930s, and 1970s) should begin in 2029, when the last of the Baby Boomers (born between 1946-64) reach 65. However, Obamanomics may cause an earlier bust wave. More info on Jim Rogers (the accuracy of his predictions seem mixed):

Jim Rogers is an expatriate American, who lives in Singapore. He has a BA degree from Yale University in 1964, and a second BA from Balliol College, Oxford University in 1966.

In 1970, Rogers joined Arnhold & S. Bleichroeder, where he met George Soros. That same year, Rogers and Soros founded the Quantum Fund. During the following 10 years the portfolio gained 4200% while the S&P advanced about 47%. In 1980, Rogers decided to "retire", and traveled on a motorcycle around the world.

Asked about his net worth -- a guessing game on Wall Street (is it $100 million or more like $1 billion, money managers wonder?) -- he sternly says, "Of course I'm not going to answer that."

Rogers majored in politics, philosophy, and economics, while Soros majored in economics and specialized in international trade.

Here's a Rogers's interview:

The Financial Times interviewed Jim Rogers in late 2007. They were trying to get an idea of where he thought the US economy was headed in 2008 and beyond.

FT: You said you’re selling US assets. So what makes you so bearish on the dollar?

Rogers: The central bank in America has said that they’re going to print as many dollars has they have to drive down the value of the currency. The secretary of the treasury is trying to drive down the value of the currency. I mean it doesn’t take a genius to figure out that it’s a currency that’s going to be going down for some time to come. They want to debase the currency. The head of the central bank has been printing money since he got there for two years. He’s printing money very rapidly now, especially since this summer. This is a man who his whole intellectual career has been spent studying the printing of money. Now America is giving the printing presses. I don’t want to be in a currency like that.

FT: So what’s your assessment of Bernanke’s performance so far?

Rogers: Well it’s been a disaster. I mean he’s been printing much too much money, since the beginning. Last summer he bailed out his friends on Wall Street, said there was some kind of problem. I mean the stock market was down 6%. If a 6% decline in the stock market causes the man to go and cut interest rates by a half a percent, when inflation is running rampant, when the dollar is under pressure anyway, what’s he going to do when the market is down 36%? What’s he going to do when they have a real crisis? I mean he’s going to print money until we run out of trees! I don’t want to own US dollars in an environment like that. I don’t know why you would. I don’t know why anybody would.

FT: So is the US already in a recession?

Rogers: In my view yes. We know that housing is in worse than recession. We know that automobiles are in worse than recession. We know that many parts of the financial community are in worse than recession. We know that machinery — Caterpillar Tractor, one of the largest machinery companies in the world, has said it’s the worse they’ve seen in 50 years. There are a lot of sectors of the American economy that are in serious trouble, shall we say. The government says it’s not a recession. I’d like to know from them, what’s keeping it up, that if all these other sectors — and you know housing and automobiles are two of the very largest sectors — what is not in recession? Retail sales are down; I could go on and on.

FT: So what’s next? What do you think is coming?

Rogers: Well for the dollar? Well probably the dollar is going to have a big rally about now, because everybody in the world is short the dollar. In my experience in the investment markets, when everyone is on one side of the boat, you’d better think about going to the other side of the boat for a while. I suspect there’ll be a rally; I have no idea what will cause it. And if there’s a rally, for a few weeks, a few months, I would urge you to sell that rally — that’s my plan — to get the rest of my money out of US dollars.